Life After Debt

NPR reported yesterday on a previously unreleased Clinton Administration document which details the possibility of the United States Treasury paying down its entire debt - by 2012, no less. The paper, titled Life After Debt, explores the question of "what would the world look like without Treasury bonds?" Since much of the global economy relies on Treasury bonds, the effects of a world without them would be unprecedented. Even after the S&P downgrade, the world is still flooding into the Treasury market (evidenced by historically low interest rates).

Alas, with US pubic debt at over 14 trillion, the question over the ramifications of an even Government balance sheet seems more like a fantastical thought experiment than a potential problem. One needs only to glance at the graph below (from the CBO via NPR) to appreciate how far we've fallen.